IAMOT 2014 Innovation Management - Energy Sector

1 International Association for Management of Technology IAMOT 2014 Proceedings BRAZILIAN NATIONAL SYSTEM OF INNOVATION IN THE ENERGY SECTOR Aline Silveira, Master Universidade Positivo PMDA – Master and Doctoral Program in Administration Rua Prof. Pedro Viriato Parigot de Souza, 5300 aline@dariosilveira.com Andriele de Prá Carvalho, Master Universidade Positivo PMDA – Master and Doctoral Program in Administration Rua Prof. Pedro Viriato Parigot de Souza, 5300 andridpc@gmail.com Márcia Beatriz Cavalcante, Ph.D Professor, Universidade Positivo PMDA – Master and Doctoral Program in Administration Rua Prof. Pedro Viriato Parigot de Souza, 5300 inovaxpress@gmail.com Marli Kunzler, Master Universidade Positivo PMDA – Master and Doctoral Program in Administration Rua Prof. Pedro Viriato Parigot de Souza, 5300 marli@dknet.com.br Sieglinde Kindl Cunha, Ph.D Professor, Universidade Positivo PMDA – Master and Doctoral Program in Administration Rua Prof. Pedro Viriato Parigot de Souza, 5300 skcunha21@gmail.com \ 2 Abstract This article has the aim of analyzing the Brazilian National Innovation System in the perspective of public policies indicated in the Action Plan for Science, Technology and Innovation in the energy sector for the period from 2007 to 2011. In order to achieve the objective, we approached the sectorized and national innovation system, the public policies for the sector, the stakeholders involved in the system, the actions for qualifying people and public and private R & D efforts. With regard to the research methodology, it is of a qualitative and exploratory nature as well as descriptive, making use of secondary data sources. Both for the collection and treatment of data, the targeting of research occurred based on indicators or evidence of the presence of the same people who were chosen to advance. The indicators were limited to (1) structure of the national innovation system, (2) the stakeholders involved, (3) training and R & D efforts, and (4) public and private investments in research, development and innovation in the energy sector. The result indicates that the National Innovation System is in a phase of consolidation, and that there are indications that this, along with the strategic actions for the energy sector, have contributed to provide an environment conducive to innovation. The national innovation strategy recognizes the need for the maturation of SNI, development of physical infrastructure, sources of encouragement, empowerment of people (with strong emphasis on engineering) and expansion of relations between the system’s stakeholders, to create actions aimed at meeting this need, at least in part. In this context, the Energy Sector’s expressive feature is the diversification of its renewable energy potential. The outlook for innovation in the energy sector in the country is significant. Brazil has vast renewable resources and hydropower potential of conserving energy matrix with low emissions of greenhouse gases, as well as exploring new sources. Keywords: National Innovation System; Energy Sector Innovation Strategies, Science, Technology & Innovation Policies Introduction There are significant differences between the SNI (National Innovation System) in developed and developing countries, since at first the concept of SNI emerged from evidence of empirical data, a context that only a few developing countries can be applied to, which is not the case of Brazil. For developing countries, the concept of SNI is a guiding element for structuring the CTI system (Science, Technology and Innovation) which is most suitable to the country, helping to provide a favorable context for the development and application of instruments for public policies of development of CTI, whose relational aspect between the system’s stakeholders should be particularly emphasized (Manzini, 2012). At its source, the SNI has evolutionary approach, expressing the impulse of technological progress, moving from individual innovations to focus on systemic processes that allow the accumulation of skills (Freeman, 1995). This evolutionary approach provides a consistent instrument to account for the complexity of the development process. In addition to this approach, the SNI is seen as a factor for competitiveness and differentiation between countries, especially in relation to technological factor, the ability to innovate, a culture of innovation, its historical origin, its network of institutions, being unique in each region, sector or country as one of the main responsible in delineating the way political and economic stakeholders formulate and produce successful innovations (CGEE, 2008). 3 Some systems can be more innovative than others when it comes to developing political strategies and institutional reforms that respond to the new challenges. (Lundvall, et al., 2002). According to Tidd, Bessant and Pavitt (2008, p. 160) the national innovation systems influence both the direction and the intensity of organizations’ innovation activities, especially when there is identification of national research and production capabilities, that indicate technological fields and related product markets, which are more favorable to innovation. The innovations and learning modify and diffuse new technologies by means of interaction between organizations and institutions in the public and private sectors. The flow of these interactions between stakeholders and institutions make up a system and is what determines the maturity of the National Innovation System and its capabilities (Lundvall, 2005). The public sector plays a relevant role when it encourages, through public policies, the improvement of production and distribution of technology and promotes the reduction of transaction costs (Lundvall, et al., 2002). The design of these innovation policies is also creating a favorable institutional environment, which plays an important role in the implementation of innovation (Edquist, 1997). The State has the role of facilitating investments, in particular those in infrastructure to support the private sector. The State is central in establishing guidelines, regulating, planning and executing infrastructure projects (Chang, 2003). Companies innovate in a process that is related to the institutional environment and, at the same time, its influence (Edquist, 2001). The energy sector is a strategic point for the development of any country, particularly as it is essential to all economic activity (Chang, 2003). Investments in this area are necessary for streamlining and meeting the service demands of the electricity sector in a country. In particular, in Brazil, one of the factors that highlights investment in this sector in Brazil is the World Cup, which is being held in the year 2014, which has required 77 interventions to reinforce the electrical systems in the host cities for the games, as well as for the 2016 Olympics, which together totaled an investment of R$ 240 billion (MME, 2014) In addition attention should be paid to the increase of production and consumption from the ascension of the lower classes (Silva, Scherer and Porsse, 2013), stimulated by public policy programs, in particular the PAC (growth acceleration program) which increased the power generating capacity in Brazil by 9,231 MW, as well as the "Luz Para Todos" (electricity for all) program which made 413,739 new electrical connections for people living in rural areas, indigenous villages and agrarian reform settlements (BRAZIL, 2014). The energy sector is also important for a country’s infrastructure, as it accompanies the development and growth, being essential for these to happen. In Brazil, 66% of energy consumption is distributed between industrial production, cargo transport and mobility of people. In industry, 57% of the energy consumed is from renewable sources (BRAZIL, Empresa de Pesquisa Elétrica (Electric Research Company) [EPE], 2013). Thus, developing technologies and innovations of impact aimed at the energy sector becomes essential, considering the basic premises of reduction of environmental impact, greater social impact and energy efficiency. Energy has a fundamental role in development and innovation (Perez, 2010), but when it comes from non-renewable sources, it brings serious environmental effects that place the sustainability of the planet at risk (Barbieri, 2007). In 2013, according to data compiled by BNEF (Bloomberg New Energy Finance), Brazil was among the countries that demonstrated a decrease in clean energy investments, which in total fell 12% in relation to 2012, although growth is expected for 2014 (Mccrone, 2014). 4 Energy innovation must seek to be guided by sustainable sources, since they ensure the resources for future generations (Nakata & Viswanathan, 2012). Innovation in energy sources and sustainability are related, bringing economic, social and environmental benefits. In order that development occurs it is essential that there is a national innovation system, to ensure the supplies required for this challenge. Diversifying the matrix of electricity supply is a relevant point to ensure satisfactory quality and reliability of energy services. Private investment in the energy sector requires a favorable political, institutional and business environment, with reliable rules and regulatory framework so that the risks are mitigated and generate stimulus for the participation of private enterprise in the sector (Costa & Tiryaki, 2011). In this sense, Brazil demonstrates a reality and scenarios suitable for investment, given that the energy sector is a strategic priority, it has a regulatory framework that addresses the country’s economic and social needs as well as giving guarantees of stable business for investors. This research seeks to answer the following question: Has the national policy for science, technology and innovation in the Energy Sector contributed towards the building of an environment conducive to innovation? In this sense, to better understand the dynamics of the energy sector an analysis of the Brazilian National Innovation System was performed in the perspective of public policies indicated in the Action Plan for Science, Technology and Innovation for the energy sector in the period from 2007 to 2011, focused on whether there is an innovation-friendly environment for suppliers. The survey was exploratory, as it attempts to obtain closer knowledge on the subject (Santos, 1999). Inherent in this kind of research, the methodological procedures involve data from secondary sources, through bibliographical research (Lakatos; Marconi, 2010), originating from materials already prepared and published as books, periodicals, scientific articles and other information available on the World Wide Web. However, the selection and use of secondary sources were based on official data provided by the Brazilian Government and CTI related institutions. The research presents a descriptive character, since it seeks to expose features that compose the SNI looking to establish relationships between variables, although without the commitment to explain the phenomena it describes. The article includes the presentation of the problem and objectives set out in this section. The second section presents the methodology adopted for the study, followed by theoretical foundations. In the fourth section, we present the results and in the fifth section the final considerations are made. Methodology: Research Strategy This article adopts the SNI (National Innovation System) as a concept and a dimension of analysis, as the countries exist as political entities with their own agendas regarding innovation (Lundvall, et al., 2002). In accordance with the objectives of the survey, it can be classified as exploratory, as it aims to obtain a closer knowledge of the subject (Santos, 1999). Inherent in this kind of research, the methodological procedures involve data from secondary sources, through bibliographical research (Lakatos; Marconi, 2010), originating from materials already prepared and published as books, periodicals, scientific articles and other information available on the World Wide Web. However, the selection and use of secondary sources were 5 based on official data provided by the Brazilian Government and CTI related institutions. As an illustration, one of the fundamental documents of basic research was the ENCTI (National Strategy for Science, Technology and Innovation) which highlights the support axes, the priority programs for future sectors, contemplating strategic objectives and goals for the quadrennial 2012-2015. In this same document there is also a statement of guidelines and actions for the quadrennial 2007-2011, which is why the data surveyed refers to this period, having as reference for the research other official data, which will complement and clarify the variables of this research. The design of the survey can be viewed in Figure 1 below. Theoretical Review Methodological Definition Selection of research variables Collection of secondary data Development of Article Results Treatment and analysis of data Figure 1. Research Design Source: Developed by the authors. The cross-section of the survey was horizontal with data collection performed between the months of August and October 2013. The treatment of data was carried out between September and November 2013. For the purpose of ease of representation, qualitative and quantitative data extracted from the collection were interpreted through documentary analysis and aggregated in tables for better viewing, and the analysis was performed in descriptive form. Both in the collection as in the treatment of data, the targeting of research occurred based on indicators or evidence of the presence of the same data that was chosen at first. The indicators were limited to (1) structure of the national innovation system, (2) the stakeholders involved, (3) training R&D and efforts, and (4) the actions planned for the Energy Sector, excluding other indicators, although recognized as important. Some constraints were encountered during the phase of data collection and analysis and refer to: (i) lack of widespread availability of information on government sites; (ii) information dispersion; (iii) data inconsistency of the same nature by various governmental sources; (iv) limited scientific literature on the subject, at national level. Theoretical Foundations The context in which organizations act is heavily dependent on the policies of their host countries. The insertion of the same innovation it is essential to support them. In this sense, it is important to highlight some concepts and foundations inherent in the National and Sectorized Innovation System. National Innovation System (SNI) 6 The SNI, according to Freeman (1988), has an evolutionary approach, which considers a dynamic perspective, where existing technologies can no longer satisfy the company, or could find new problems, generating the need for new technologies. Evolutionary innovation is therefore any internal systemic change that increases the average efficiency of the system (Seifoddin, Salimi, Seyed &, 2008). In this context of evolutionary approach, Nelson and Winter (1982) extended the Schumpeterian vision of the technological competition between companies is the main driving force behind economic development and the changes in capitalist economies. Some systems can be more innovative than others when it comes to developing political strategies and institutional reforms in response to new challenges. (Lundvall, et al., 2002). The foundation of the SNI is that innovation does not depend only upon the isolated performance of companies, organizations or teaching and research institutions, but also on how they interact with each other and with other stakeholders. In this sense, one can consider it an interaction between different partnerships (Cassiolato & Lastres, 2008). The SNI establishes decentralized decisions which drive technological progress (Clausen, 2009). It is the institutions and structures that encourage the skills required that influence the changes. In this way, it is through a network of public and private institutions, stakeholders and organizations that new technologies and innovations are disseminated, in a package of economically useful knowledge shared between the different stakeholders in the system, which have diverse skills, vocations and natures (Freemann, 1987; Lundvall, 1992). Edquist (2004) points out three main stakeholders or agents in a national or sectorized innovation system, being: (i) the State, in formulating public policy, (ii) universities and research institutes, in the dissemination of knowledge and (iii) companies, in the transformation of knowledge into products or services. It is important that there is interaction between these stakeholders and that the policies and actions are efficient and effective and are not only concerned about financial resources. As companies do not innovate alone, but in a network context, innovation is conditional upon the simultaneous influence of all actors, be they economic, institutional or management. Innovative capacity will depend on how those factors relate to one another (OECD, 2004). The Brazilian National Innovation System is classified in the scope of the analysis of stakeholders as heterogeneous, marked by low dynamism, by having his stakeholders disarticulated and possessing a system of science and technology that migrates to a national system of efficient innovation. For the system to be effective it is important that is dynamic and that there is great interaction and dialogue between its stakeholders, as the greater the support for innovative activity, the more strategic to the economy (Rejane, 2011). Quadros, et. al. (2000) considers that Brazil created a science, technology and innovation system which is situated in intermediate position between countries of recent industrialization though distant from the standards of leading nations. In the opinion of the authors, there are still limitations in the national innovation system and restricted capacity of technological innovation, the fragility of the learning processes and the heterogeneity of the productive structure. Sectorized innovation system The SSI (Sectorized Innovation System) emerged brokering the SNI (National System of innovation). It is called sectorized as it approaches the meanings of sectors, which had its origin in the division and specialization of labor. In this sense, it is possible to consider the SSI as the interaction between the various 7 stakeholders, through different mechanisms, involving growth and productivity in the different sectors that compose the SNI (Villafranca & Beamonte, 2003). The SSI analytically describes differences and similarities in the structure, organization and boundaries between the sectors, seeking to identify what affects innovation, performance and competitiveness between countries in different sectors, striving for improvements in public policies (Malerba, 2002). In this way, the SSI and the interaction between its stakeholders may make or facilitate technical change for sectors and companies. Technical change is influenced by the characteristics of the environment in which the stakeholders are inserted, this environment exerting influence on innovation across sectors (Silva, 2013). The main components of an SSI are the set of specific knowledge, technologies and inputs, as well as the learning processes. These different systems may exhibit different strategies between the segments, depending upon the opportunities. These strategies are seen within the SSI as a network of agents in a specific technological area, acting on productive restructuring in the various possible forms of transformations and interaction between various sectors (Malerba, 2002). It should be noted that in this way the systemic approach of innovation covers the interdependence, in which innovations do not occur in isolation, but through non-linear interactions in a complex social and economic relationship (Lundvall, et al., 2002). Results In this section we present the results arising from the analysis of the national CTI policy for the energy sector, as well as the structure of the energy sector’s SNI represented by the structure’s main stakeholders, knowledge-building efforts and public and private investments in R&D (Research & Development) to the energy sector. Finally, we check whether the relationship between politics and the SNI has created an environment conducive to innovation. 4.1 SNI Structure and Main Players in the Energy Sector According to the ENCTI (national strategy for Science, technology and innovation) (MCTI, 2012), the Federal Government intends to invest for the quadrennial of 2012-2015, R$ 74.6 billion (Brazilian currency in Reals) in science, technology and innovation activities, with the focus on strengthening the support base, namely: promotion of innovation, training and qualification of human resources and strengthening of research and scientific and technological infrastructure. the health industrial complex, oil & gas, the defense aerospace industrial complex and green economy-related areas, such as clean energy. This investment of R$ 74.6 billion during the 2012-2015 quadrennial represented an annual contribution of R$ 18.65 billion from Federal and State public resources in the system, i.e. it provisioned 21.18% of the total. Considering that on average developed countries allocate 2% of GDP to the national innovation system (with special emphasis on R&D), we can affirm that the advances are timid, considering that this would require five times the investment in the period (MCTI, 2012). On the other hand, one can point out that the regulatory framework of the sector represents one of the strongest points of the system. The regulatory framework for innovation began in 1993 with law 8661, which introduced tax breaks for companies seeking 8 technological innovation, with subsidies for their realization, analysis and approval by the Ministry of Science and Technology, being that the tax benefits were extended through law 10,637. In 2004 the Government launched the PITCE (industrial, technological and foreign trade policy), advancing at an institutional level. Soon two important actions were created in terms of industrial policy: the Innovation law 10,973/2004, which is one of the main reference points, and that seeks to disseminate PITCE technology and innovation, stimulating the cooperation between universities and companies. The energy sector presents a complex network of leading stakeholders. They can be divided into three broad groups: (i) Executing Agencies, (ii) Partnerships and (iii) Sources of Funds (MCTI, 2013b). The partnerships are the most diverse, public and private in origin, composed of universities, research centers, teaching and research institutes, energy companies, suppliers of equipment and services, technology-based companies, business associations, and Government agencies. From the point of view of these institutional stakeholders that comprise the SNI and the SSI of the energy sector, we can cite FINEP (‘Financiadora de Estudos e Projetos’ – Project and study financier), CAPES (‘Coordenação de Aperfeiçoamento de Pessoal de Nível Superior’ – Higher education personnel training coordinator), CNPq (‘Conselho Nacional de Desenvolvimento Científico e Tecnológico’ – national counsel for scientific and technological development), MCTI (Ministry of Science, Technology and Innovation), MME (Ministry of Mines and Energy) among others. Among the representatives of the partner network of the energy sector SSI, ANEEL (the national electrical energy agency), ABDI (Brazilian Agency For Industrial Development), the EPE (energy research company), CGEE (‘Centro de Gestão e Estudos Estratégicos’ – centre for management and strategic studies), CEPEL (electric power Research Center), BNDES (‘Banco Nacional de Desenvolvimento Social’ – National social development bank) among others. The Brazilian electrical sector can be defined through the set of activities in generation, transmission and distribution or marketing of electricity (Barros, Claro & Chaddad, 2009). The electricity sector in Brazil is made up of 54 companies (ANEEL, 2013a), the main players shown in table 1, below. Ranking 1 2 3 4 5 6 7 8 9 10 Company Petrobrás AES Eletropaulo Copersucar CEMIG Distribuição Eletrobrás Furnas Itaipu Binacional Light Sesa CPFL Paulista Chesf Copel Distribuição Type State Private Private State State State Private Private State State Control Brazilian American / Brazilian Brazilian Brazilian Brazilian Brazilian / Paraguayan Brazilian Brazilian Brazilian Brazilian Table 1: Major companies in the energy sector in Brazil Note. Source: Editora Abril. (2012). Revista Exame: melhores & maiores. São Paulo, SP: Author. Retrieved from http://exame.abril.com.br/negocios/melhores-e-maiores/empresas/maiores/1/2012/vendas/-/energia/-/- The energy sector in Brazil has a low (less than 30%) collaboration in innovation activities between companies. Only 20% of large companies and 15% of the medium and small maintain a collaborative relationship for innovation with suppliers and this index is even smaller regarding the insertion of the clients’ perspective in innovation activities (OECD, 2011a). 9 CTI Policy (2007-2011) Some Brazilian efforts directed towards a science and technology policy were registered in 2002 in a document called the White Paper, in order to preserve the efforts of science, innovation and technology as primary priorities for Brazil’s advancement. In this sense, among the main objectives proposed for the national policy for science, technology and innovation are the creation of an environment conducive to innovation in the country, the expansion of the capacity for innovation and the expansion of the national scientific and technological base, consolidation, improvement and modernization of the institutional apparatus for science, technology and innovation (CT&I), in addition to fostering integration between all national regions and the development of a broad base of support and involvement of society in the National policy for Science, Technology and Innovation. The Ministry of Science and Technology has developed a national strategy for Science, Technology and Innovation (ENCTI), which ratifies the indispensable role of innovation in the country’s sustainable development efforts, with an emphasis on the generation and appropriation of scientific and technological knowledge and a business environment more competitive at international level, as well as seeking to turn Brazil into a scientific, technological and innovative power (BRAZIL, 2002). Among the investments of CT&I, the Energy Sector is considered strategic, being possible to highlight the emphasis on renewable energy, research and innovation for ethanol (new generation), platforms for biomass gasification, energy use of waste from the agricultural chain, sustainable charcoal production, photovoltaics (solar), technological innovation for parts or systems - hydroelectric, solar, wind, and biomass as well as safety, efficiency and intelligence in energy transmission networks (BRAZIL, 2002). According to table 2 below, Brazil’s energy matrix in 2012 was composed of 42.4% renewable sources, an index higher than the world average of 13.2% (Brazil, energy research company [EPE], 2013). However, there is room for diversification of renewable sources, like wind, solar (thermal and photovoltaic), biomass and tidal power (MCTI, 2013b). Types of Energy Renewable Non Renewable Sugarcane Biomass 15,4% Oil and oil by-products 39,2% Hydraulic and Electricity 13,8% Natural Gas 11,5% Firewood and Charcoal 9,1% Mineral Coal 5,4% Bleach and Other Renewable 4,1% Uranium 1,5% Subtotal 42,4% Subtotal 57,6% Table 2: Composition of the Brazilian Energy Matrix Note. Source: Brazilian Energy Research Company [EPE]. (2013). National energy balance 2013 – Base year 2012: Synthesis Report. Rio de Janeiro: EPE. Retrieved from https://ben.epe.gov.br/downloads/S%C3%ADntese%20do%20Relat%C3%B3rio%20Final_2013_Web.pdf The hydroelectric plants dominate 75% of the electric energy produced in the country, with only a third of the hydraulic potential of the country being used. However there are favorable conditions for the production of wind and solar energy due to its climate and surface, these sources having not been sufficiently explored, indicating fields conducive to energy investments (Not, 2013). The energy sector is considered a strategic area within the program for science, technology and Innovation. 8 programs were planned for this sector (table 3). 10 Program Sources R$ (millions) 11.1 Implementation of Infrastructure in the national teaching and research institutions in the areas of generation, transmission and distribution (G,T&D) and end-use of electrical energy. s.i.a 11.2 Expansion, modernization and maintenance of infrastructure for Technological R & D in generation, transmission, distribution and end-use of electrical energy. ELETROBRÁS CEPEL FINEP 102,4 11.3 Transmission of Electrical Energy, with an emphasis on long distance ELETROBRÁS CEPEL 68,0 11.4 Electrical System asset optimization s.i.a s.i.a 11.5 Models for planning and operation of the electrical energy system 11.6 Increased power quality and energy efficiency 11.7 11.8 ELETROBRÁS CEPEL s.i.a 212,0 s.i.a s.i.a Hydrogen economy MCT/FNDCT MCT/PPA 70,0 Renewable Energies MCT/FNDCT 40,0 Total planned resources 492,4 Table 3: Action Program for the Electrical Energy Sector (2007-2010) Nota. Source: MCTI. Ministry of Science, Technology and Innovation. (2010). Science, Technology and Innovation for National Development - Action Plan 2007-2010. Retrieved from http://www.mct.gov.br/index.php/content/view/66226.html. a s.i (without data). The Ministry of Science and Technology (MCT) presents results of the Action Plan for Science, Technology and Innovation between 2007 and 2010, the actions developed by the Electrical Energy Research Center (CEPEL), connected to the Eletrobras system and linked to MCT, with projects aimed at improving management and infrastructure, technological solutions for the expansion of the system’s operational capacity, expanding the network of laboratories and research centers, among others. The investments were in the order of R$ 600 million in that period (MCTI, 2013c). The total amount of resources planned for the Energy Sector amounted to R$492.4 million. Of the features planned for the quadrennial 2007-2010 for the Energy Sector, R$ 382.4 million refer to actions involving CEPEL. Therefore, the numbers demonstrate investment exceeding 150% of that planned. Regarding the other programs, the report on the Main Results and Advances (MCTI, 2013c) omits this data. Notably, the recognition of the need to develop a structure and management mechanisms suitable for the promotion of innovation, present in the national strategy for Science, technology and innovation (ENCTI) reveals that the National System of innovation is in a phase of consolidation. Promoting the training of professionals, researchers expanding the physical structure and network of relationships for R&D, define sources of public funding, establish a regulatory framework for effective innovation stimulus are the ENCTI support axes (MCTI, 2012). Training strategies The policy for education and training of professionals for science, technology and innovation comprises of higher education at undergraduate and postgraduate level as well as high school (MCT, 2010). The data available for analysis of the evolution of the indicators of postgraduate 11 qualification and related training feature upward behavior 2009 compared to 2007, as shown in table 4 below. Training and capacity-building indicators 2007 2009a Increase Doctorates held in Brazil 9,919 11,368 14.60% 32,899 38,800 17.93% 2,410 2,719 12.44% 140,953 160,248 29.03% No. of annual scholarships for masters and doctors awarded by CAPES and by CNPq 47,920 64,032 33.62% No. of postgraduate scholarships for engineers (Master's degree, doctorate and PhD sandwich course) 3,063 3,702 20.86% Masters titles held in Brazil No. of postgraduate courses (masters, doctorate and vocational masters) No. of students enrolled in postgraduate courses (masters, doctorate and vocational masters) Table 4: Evolution of Qualification and Training Indicators between 2007 & 2009 Note. Source: Adapted from the Ministry of Science and Technology. (2010). Action Plan for science, technology and innovation 2007 – 2010: main results and achievements. Retrieved from http://www.mct.gov.br/index.php/content/view/66226.html a Data from 2010 & 2011 not provided by the source. It should be noted that there was a significant increase (33.62%) in the granting of scholarships for masters and PhD courses, followed by the number of people enrolled in Masters courses, vocational masters and PhDs, indicating an increase of 29%. Attention should be paid to the number of graduate scholarships granted aimed at engineering, considering that the area is considered strategic for the scientific and technological development of the country and especially to the electrical energy sector. The Action Plan on Science, technology and innovation (PACTI) presents the resources invested in CNPq and CAPES scholarships in the period from 2007 to 2010 (2011 data was not informed), indicating an increase of 207% for the period, as shown in table 5. CNPq Total Scholarships Total Capes Period Units* R$ (millions) Units ** R$ (millions) Units (R$ millions) 2007 16,846 714 36,113 647 52,959 1,361 2008 17,899 780 46,440 857 64,339 1,637 2009 19,689 879 51,499 1.158 71,188 2,036 2010 20,400 994 63,009 1.829 83,409 2,823 2011 23,280 s.i.a 78,432 s.i.a 101,712 s.i.a Totals 98,114 3,367 275,493 4,491 373,607 7,857 Quadro 5: R$ Millions invested in CNPQ & CAPES Scholarships Note. Source: Adapted from the Ministry of Science & Technology, (2010). Action Plan for science, technology and innovation 2007 – 2010: main results and achievements. Retrieved from http://www.mct.gov.br/index.php/content/view/66226.html * Scholarships granted in Brazil and abroad. Retrieved from http://www.mct.gov.br/index.php/content/view/5824/Brasil_CNPq___Bolsas_ano_sup_1_sup__de_formacao_e_qualificacao_concedidas_no _pais_por_modalidades.html ** * Scholarships granted in Brazil and abroad. Retrieved from http://www.mct.gov.br/index.php/content/view/341129.html a s.i (without information). 12 Capes stands out as the main granting agent of scholarships in Brazil and abroad for training and qualification of masters, doctors, postdoctoral students, vocational masters and visiting professors with the granting of 74% of the scholarships. Among the scholarships granted by CNPq in 2007, 40% were destined for development and 60% for scholarships (in the country and abroad). In 2011 the configuration was 24% and 76%, respectively. The distribution of CNPq grants, according to broad knowledge areas was as follows: (i) natural sciences received 36% in 2007 and 34% in 2011; (ii) life sciences had a contribution of 39% of 2007 and 44% in 2011; for the (iii) Humanities 15.8% in 2007 and 16% in 2011 (‘Conselho Nacional de Desenvolvimento Científico of Tecnológico – CNPQ’ – National Counsel for Scientific and Technological Development, 2013). In 2011 the ‘Ciência sem Fronteiras’ (Science Without Borders) program was launched, aiming to promote, consolidate and expand the internationalization of science training through international exchanges and mobility. The program began during the third quarter of 2011 and has already granted 37,786 scholarships, being 15,801 (41.81%) for engineering and other technology areas, 6,690 (17.70%) for biology, biomedical sciences and health, 3,053 (8.7%) for exact sciences and Earth and 3,028 (8.01%) for the creative industry. The remainder of funds grants are dispersed among other areas considered priorities (Ciência sem Fronteiras Science Without Borders, 2013). Public and private investment in RDI The CTI indicators constitute themselves as differentiating factors of social and economic development of countries and regions (Rocha & Ferreira, 2004). The State has a fundamental role in the granting of long-term credit to stimulate innovation. The availability of risk capital becomes an essential factor to the creation of an environment more conducive to innovation production and mitigation of the uncertainty inherent in the activity. In Latin America there is a lack of institutions devoted to the financing of innovations, especially when dealing with the long term (Gordon, 2009). The Energy Sector Fund, better known as CT-ENERG, is a fund destined to finance programs and projects in the energy area. The Fund's resources come from a legal determination established by laws 9,991/2000 and 10,848/2004, resulting in the obligation of companies in the electricity sector (electricity generation, transmission and distribution concession companies) to apply the percentage of 0.75% to 1% of net revenues to research and development, being that: (i) 40% is directed to the National Fund for Scientific and Technological Development (FNDCT); (ii) 40% for R&D projects, according to regulations established by the National Electrical Energy Agency (ANEEL); and (iii) 20% to the Ministry for Mines and Energy, in order to fund the study and research into power system expansion planning, as well as the inventory and feasibility studies needed for the exploitation of hydroelectric potential (MME, 2013; ANEEL, 2008). Therefore, it is up to the energy sector companies to invest a minimum percentage of annual revenue, set in specific legislation, towards research and development (R&D) programs in order to promote innovation and technological challenges for the sector. The program is coordinated by the National Electrical Energy Agency (ANEEL). The emphasis of the program is the link between the direct expenses of companies in R&D and the definition of a sectorized program to address long-term challenges. It also aims at stimulating research and innovations with a goal of seeking new power generation alternatives with lower costs and better quality, promoting the significant improvement to competitiveness of national industrial technology through the expansion of the training of 13 human resources in the area, increasing national technology excellence and the establishment of international exchanges in the field of research and development (Ministry of Science, Technology and Innovation [MCTI]; National Fund for Scientific and Technological Development [FNDCT], n.a.). In the electrical and gas sector, the percentage of sales revenues spent on innovative activities, such as R&D was 1.28%. 95.9% of enterprises in this sector develop R&D activities continuously, with 17% of persons employed dealing exclusively with this activity, showing a higher qualification level compared with the other surveyed sectors (industry and services), whereas 60.6% are graduates and 23.8% are postgraduates (BRAZIL, 2013b). The amounts of investments in R&D projects, drawn up in accordance with the Program Manual of Research and Development in the Electrical Energy Industry (ANEEL, 2013b), registered by Aneel, with data updated August 2013, correspond to an amount of R$ 5,195 billion. Of these, approximately 41.45% (R$ 7,062 billion) are investments directed towards alternative sources of electrical energy generation (ANEEL, 2013c). The public expenditure in R&D to the energy sector for the period from 2007 to 2011 was R$ 905 million, showing declining investments, since in 2007 it accounted for 1.4% of the total invested and in 2011 only 0.42% (MCTI, 2013b). In 2010, of the funds invested in R&D, 52.4% were public against 45.7% participation on the part of companies, and of these, 24% came from public funds (MCTI, 2012). With regard to the use of government programs to encourage innovation by businesses, in 2011 approximately 28% of companies in the electrical energy sector were benefited. Although the R&D activities appear as being financed by their own companies in the sector (around 95% of allocated resources), other innovative activities were financed with thirdparty resources (44%), 17% with private resources and 27% with public resources (BRAZIL, 2013b). The results of innovation in this sector indicate that most product innovations occur through cooperation between the company and other companies or institutes (65.4%), with universities and research institutes appearing expressively as the most important partners (70.4%). For process innovations the larger responsibility lies with the company itself (65.4%). The main organizational and marketing innovations are related to management techniques (35.5%), environmental management techniques (23.5%) and organization of work (20%) (BRAZIL, 2013b). The main impacts obtained by innovations were improvements in the quality of goods and services, reductions in labor costs, reduced production costs and energy consumption. As the main obstacles to innovation, companies in the electrical energy and gas sectors pointed to the high costs of innovation, organizational rigidity and excessive economic risks. These companies point towards market conditions as the main reason not to innovate (BRAZIL, 2013b). According to the OECD (2011b), in Brazil 35% of organizations have their own R&D activity, developing it internally within its structure or participating in external research networks. However, less than 10% of innovative products are results of research and development (R&D) activities. From the above it can be seen that there are several mechanisms for public and private investments targeting various RDI activities within the energy sector. Although most of the resources are from public investment there is a timid participation by the private sector in financing R&D activities, which occurs mainly through legal enforcement, or occasionally to improve performance, through routine improvements. 14 In conclusion: challenges and prospects for innovation in the energy sector The National Innovation System (SNI) presents itself in a phase of consolidation, requiring significant efforts to provide an environment conducive to innovation. The national innovation strategy recognizes the need to mature the SNI, developing a physical structure, funding sources, training of people (with strong emphasis on engineering) and expansion of the relationships between the system’s stakeholders. With regard to qualification-building efforts at the national level, depending on the increase in the quantity and quality of scholarships granted in Brazil and abroad, the effects of the impact of this policy will be observed significantly in the coming decades, in scientific, technological, economic, and social spheres. The distribution of scholarships offers consistency with the strategic areas defined by the national policy. With regard to the resources provided to CTI, in particular for the quadrennial 20122015, they are below the standards of developed countries, since the recommended average is 2% of GDP per year, and the forecast of the investment was of 2% for the whole quadrennial. The electrical energy sector appears as a system which provides legal mechanisms for stimulating R&D in participating organizations of the system, being that most companies in the sector (95.9%) develop R&D activities continuously and it has the highest level of human resources training in relation to selected services and industry (BRAZIL, 2013b). In particular the role of ANEEL, as coordinator of this process, and FNDCT (CT-energ), Eletrobrás and CEPEL, as funding sources, are crucial in this regard. In this way, the sector of special interest for the power industry demonstrates a structural and institutional organization that encourages innovation from system stakeholders. This sector also demonstrates expressive potential for investment in the diversification of renewable energy sources. The strategic action program for the sector indicates that resources are directed to R&D, renewable energy, hydrogen economy and technological applications specific to the improvement of the management of the electrical system. Generally, one can consider that there is evidence that the national strategy for science, technology and innovation has contributed to creating an environment conducive to innovation. However, there is no institutional apparatus that favors the transparency and visibility of the results from investment in CTI already obtained in a condensed manner. This finding was the biggest limiter in accessing information that clearly showed the national strategy's contribution to innovation in the energy sector. In this exploratory research process we also detected the incipient disclosure of government-funded projects that actually generated innovation in the area of energy, especially for renewable energy sources in Brazil, such as wind and solar, even though Brazil is highlighted as the third country in the world in terms of quantity of clean energy projects (Sebrae, 2013). The prospects for innovation in the area of energy in the country are significant. Brazil has vast renewable resources and hydroelectric potential that allows for the preservation of its energy matrix with low emissions of greenhouse gases, as well as exploring new sources. ‘Inova Energia’ (Energy Innovation) is a government program developed in conjunction with FINEP, BNDES and ANEEL, which provides more than R$ 3 billion for investment, to encourage innovation in the energy sector, in production chains for intelligent electrical networks, solar and wind power, hybrid vehicles and vehicular energy efficiency. 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